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China 'needs to take active role'
By Fu Jing (China Daily)
Updated: 2008-10-29 09:42

A top economist and leading bankers said yesterday that China should be an active player in rebuilding the battered international financial system in order to ensure a stable and mutually beneficial global economic order.

China 'needs to take active role'

"We should be an active in the coming international negotiations and try our best to play a role," said Guo Shuqing, chairman of China Construction Bank, one of country's four largest lenders.

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Currencies, such as China's renminbi, should be added to the international basket of reserve currencies along with the US dollar, the euro and the Japanese yen.

The experts even suggested the Chinese authorities should set up taskforces to conduct research on the role China will play in the new international financial regime.

Former Asian Development Bank senior economist Tang Min suggested that China should "embrace the opportunity" and fulfill its international responsibilities.

"The international financial system should become more diversified and demands from developing countries should be recognized," said Tang, who is now deputy secretary-general of the Beijing-based China Development Research Foundation.China 'needs to take active role'

"More currencies, especially China's renminbi, should be put into the basket of global reserve currencies."

Guo and Tang made the remarks in interview with China Daily on the sidelines of a seminar on China's reform organized by the China Development Research Foundation.

Most of the economists attending the seminar agreed that China should play a role in tackling the current turmoil and rebuilding the international financial order prior to the G20 summit in Washington on Nov 15.

Tang said Chinese authorities should organize several expert taskforces to conduct intensive research on the international currency system and cross-border credit flow.

"And we should also play a role in establishing an effective mechanism to conduct international negotiations to establish a new financial order," Tang said.

He suggested that a new global monitoring and arbitration system should be put in place to keep track of cross-border capital flows.

"The system could work as a warning and arbitration system to deal with wrongdoings in global credit flow," Tang said.

Guo, who once served as deputy governor of the nation's central bank, said China's potential role in the new financial order was a result of the economic strength it gained during the past three decades; with its GDP growing at an average of 9.8 percent annually and foreign reserves reaching $1.9 trillion.

Guo said China should actively embrace the opportunity and take the lead in rebuilding the international currency system.

"In some way, China has already become the world's biggest capital exporter and it should have a say in the system."

Tang agreed with Guo, but he added: "We should bear the interests of other developing countries in mind when negotiating with developed countries."

"This is about the new order: it's a system to ensure financial security and protect everyone's interests," said Tang.

Li Jiange, chairman of China International Capital Corporation (CICC) struck an optimistic note.

"In times of crisis there are many doubters and pessimists, and this mood is contagious," said Li, a former vice-president of the Development Research Center of the State Council.

He said the crisis resulted from financial derivative tools, which caused many economic bubbles.

"But we cannot criticize international financial cooperation and innovation, which has, for example, promoted the development of the high-tech industry."

Li said the international community, including China, should work hard to find ways to avoid financial risk in future cooperation and global credit transactions.

"Financial innovation will not be stopped, but there should be a way to root out risks," Li pointed out.


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